FX forecast for 2009

We are currently watching a soap opera. But not the type of soap that only unfolds on TV. You can catch it from everywhere: TV, print, radio, internet even from your neighbors. The cast consists of a variety of players or actors/actresses set to make lives miserable or less miserable at least. The protagonist may either be you or I and the antagonists are too many to mention.

I’m pretty sure you know that the plot is all about the ailing world economy. As William Buffett puts it, “we are engaged in an economic Pearl Harbor.” Remember the bombing of Pearl Harbor in 1941? It was a surprise attack by the Japanese empire to disable the U.S. Pacific fleet. Nobody saw the attack coming, considering the intel way back 68 years ago. But the financial crisis was building up day by day, yet no one is prepared for its impact.

Came 2009 and analysts only see more gloom. However, some see light amidst the economic meltdown. Says Wayne McDonell, author of The FX Bootcamp Guide to Strategic and Tactical Forex Trading, “The good news about forex trading is that good opportunities are available in today's falling market caused by our ailing economy.”

He also said that profit is definitely attainable as long as the trader will keep watch of important developments that has impact over the foreign currency market. Aside from that, the trader must also have the right strategy to apply once it occurs.

The author said that forex traders need to watch out for these major developments which are likely to happen in 2009:

·         Treasuries crashing

·         U.S. stock market rally

·         Depreciation of U.S. dollar

·         Depreciation of yen

·         Rising Australian dollar

Possible strategies McDonell advised on these developments include buying the Australian dollar over yen. “The market will be flooded with yen so it will devalue quickly,” said McDonell. He also encourage selling of 10-year T-notes (treasury note) and purchasing the Dow and S&P 500.

As President-elect Barack Obama take over the White House, market participants are expecting the incoming U.S. government to make its bailout funds work harder to get credit flowing again. Many are hoping that his administration will act swiftly in pulling the U.S. out of recession. Many are eager for the soap opera to end as soon as possible.

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